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Sham art sale puts NSW MP under fire

Eoin Blackwell

NSW MP Andrew Cornwell's political career has taken another massive hit after he admitted using more than $10,000 from a "sham" art sale to a property developer to pay his payroll tax bill.

The once rising star of the state Liberal Party was given the Rex Newell painting of a farmhouse by his parents and re-gifted the work to property developer Hilton Grugeon.

Mr Grugeon later told him he wanted to pay for it. So in late 2010 Dr Cornwell put Mr Grugeon in contact with his wife, Samantha Brookes, who invoiced him $10,120.

The chain of events was revealed on Thursday at a NSW Independent Commission Against Corruption (ICAC) inquiry into allegations state Liberal Party figures tried to circumvent fundraising bans ahead of the 2011 state election.

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Counsel assisting the ICAC Geoffrey Watson asked the ex-NSW government whip if he smelled a rat when the payment was made.

"I did," Dr Cornwell replied.

Mr Watson showed Dr Cornwell the invoice for the painting, saying it was clearly a "sham".

"I think so," Dr Cornwell replied.

Dr Cornwell said Mr Grugeon was trying to curry favour and repeatedly told the inquiry he had used the money to pay the tax bill.

"If the proposition is that I obtained financial benefit from that, the answer is clearly yes," he said.

The inquiry heard Dr Cornwell sought advice from his parents over whether the transaction breached the law and they said no.

Paintings by Australian artist Rex Newell fetch an average of $288, with the most expensive selling for $1500, the ICAC heard.

The ICAC revelations raise questions about Dr Cornwell's political future ahead of next year's NSW election.

The inquiry also heard the Liberal campaign manager for the seat of Newcastle, Hugh Thomson, offered Dr Cornwell a deal under which developers deliberately forfeited a deposit for the purchase of the former veterinarian's house.

The funds were to be put into Dr Cornwell's 2011 election campaign.

Developers have been banned from making political donations in NSW since 2009.

Ms Brookes, who arrived at the ICAC on Thursday hand-in-hand with her husband, told the inquiry that after the art work sale she put the cheque on a pin board in the family home.

She said she was surprised by Mr Grugeon's offer to buy the painting but she gave it little thought because they were in the throes of Dr Cornwell's campaign for the seat of Charlestown.

Earlier on Thursday, Dr Cornwell said he froze when Newcastle developer, and later-mayor, Jeff McCloy handed him a brown envelope with $10,000 in cash in late 2010 while the pair sat inside a luxury Bentley.

Mr Watson said on Wednesday that Councillor McCloy was expected to deny this when he fronted the ICAC.

After secreting the money in a cupboard in his bedroom, Dr Cornwell later gave it to the president of the Charlestown Liberal Party branch, Bob Beavens, who then allegedly funnelled it back into the NSW Liberal Party.

"He (Dr Cornwell) came to me and said a friend of his wanted to make a donation to the campaign and wanted to remain anonymous," Mr Beavens said.

"Newcastle is a Labor town and as I know from personal experience if you publicly support the Liberal party you get attacked.

Dr Cornwell and fellow MP Tim Owen stood down from the Liberal Party on Wednesday after ICAC heard allegations of "serious irregularities" in their 2011 NSW election campaigns.

Meanwhile, Mr Watson said an investigative journalist had contacted the commission with fresh information involving the pair.

"If it is verified, it could cast quite a different light on Mr Cornwell and Mr Owen," Mr Watson said.

The hearing in Sydney continues with Mr Owen expected to give evidence on Monday.